WASHINGTON, D.C. – Today, U.S. Senators Tammy Baldwin (D-WI) and Shelley Moore Capito (R-WV) expressed support for the Surface Transportation Board’s (STB) proposed rule that will address unreliable rail service and the high costs of rail shipping for American businesses by increasing transparency and competition in the freight rail industry. The lack of reliable rail service disrupts operations for our farmers, loggers, energy producers, and manufacturers, causing higher prices and leading to increased costs passed on to consumers.
“We have been concerned about the prolonged service challenges facing many rail shippers in recent years and have appreciated the efforts taken by the Board to date to require service improvement plans and increased data reporting,” wrote the Senators in a bipartisan letter to STB Chairman Martin Oberman. “We share the Board’s concerns about declines in rail service and believe the reciprocal switching and data provisions of the Notice of Proposed Rulemaking (NPRM) would take important steps in supporting many shippers.”
Billions of dollars of commerce rely on rail service every year, with freight rail accounting for roughly a third of U.S. exports by volume and 28 percent of freight movement. In Wisconsin, the freight rail network moves approximately 32 percent of Wisconsin’s freight by tonnage. However, recent widespread rail service disruptions are upending operations for thousands of rail shippers.
“We simply cannot afford to have widespread rail service disruptions upending operations for thousands of rail shippers. Given the recent trends of poor rail service, now is the time for the Board to move toward a final rule,” concluded the Senators. “We believe this rule takes an important step in ensuring that farmers, manufacturers, energy producers, and other shippers, and their customers, are able to receive the levels of rail service they need to succeed.”
In September, the Surface Transportation Board issued a Notice of Proposed Rulemaking (NPRM) on Reciprocal Switching for Inadequate Service, a long-requested rule which focuses on providing rail customers with access to reciprocal switching, or allowing shippers currently only serviced by one rail carrier to instead obtain service from a competing railroad as a remedy for poor service.
The NPRM would also increase transparency and set several objective and measurable standards when evaluating service levels. The proposed rule would require Class I carriers, the six largest carriers, to submit publicly accessible data and to adopt a new requirement that shippers can request service data from rail carriers to better understand inadequacies that negatively impact American businesses and consumers. Last month, STB unanimously moved forward to advance the NPRM.
Senator Baldwin has long pushed to allow greater access to reciprocal switching to increase competition. Earlier this year, she also introduced the Reliable Rail Service Act with widespread support; bipartisan legislation to ensure the largest freight railroads meet their obligations of providing reliable service to American businesses.
“The American Chemistry Council applauds Senators Tammy Baldwin and Shelley Moore Capito for their leadership and support of freight rail reforms to help improve service, including the STB’s reciprocal switching proposal. Like many rail customers, chemical manufacturers are paying a heavy price – including lost production – due to the lack of competitive and reliable freight rail service,” Chris Jahn, President and CEO of the American Chemistry Council. “We are committed to working with the Senators and other policymakers to ensure the Board is better equipped to address problems by adopting policies that allow for more rail-to-rail competition and provide better service metrics.”
“Fundamental to this proposal is a requirement for the railroads to report FMLM data on an ongoing basis, a provision to allow a shipper to receive historical service data from its carrier for a 90-day period, and the availability of an access remedy when service is unreliable, inconsistent, or inadequate. FRCA members have become increasingly aware of and concerned by the gap between the service data that the railroads report to the Board and the level of service that shippers actually receive in the real world. While this proposal is a step in the right direction, the U.S. Congress needs to address continued, systemic service problems by updating outdated Federal policies to facilitate competition, such as clarifying the common carrier obligation,” said Ann Warner, Spokesperson for Freight Rail Customer Alliance (FRCA).
“PRFBA looks forward to the positive impact this proposal promises to have on rail service which includes a requirement for the railroads to permanently provide First-Mile Last- Mile data. This rulemaking which has positive support from all five Board members is a great step in ensuring our shippers get good rail service at all their locations, even single served locations. Notwithstanding this STB action, the U.S. Congress still needs to update decades-old Federal policy to 1) facilitate competition by clarifying the common carrier obligation and 2) address railroad service by allowing reverse demurrage,” said Herman Haksteen, President of the Private Railcar Food and Beverage Association (PRFBA).
“The STB has listened to shippers’ concerns, examined the facts, and responded with proposed performance standards that are an important next step to help address inadequate and deteriorating rail service. For years, shippers have been left with little recourse and lost revenues, ultimately weakening the full spectrum of U.S. supply chains. As the largest user by volume of our nation’s rail networks, and a critical industry that feeds our manufacturing and energy supply chains, this proposed rule will benefit the mining industry and every other industry that depends on the materials we supply,” said Scott Gemperline, Director of Government and Political Affairs for the National Mining Association.
“While this new proposal in Docket No. EP-711 (Sub No. 2), Reciprocal Switching for Inadequate Service, is a departure from the initial NITL intent of developing a new reciprocal switching process to facilitate railroad economic competitiveness, it is a first step to help especially captive shippers achieve service-based alternatives for switching under certain circumstances. NITL continues to review the proposal and will be submitting comments including recommending to further enhance service, all traffic (contract and non-contract) should benefit from this proposal. As this is a very important step, NITL stresses that it does not negate the need for the U.S. Congress to address outdated Federal policies to 1) treat all commodities the same when seeking regulatory relief by revoking exempted commodities and 2) facilitate competition by statutorily clarifying the common carrier obligation,” said Nancy O’Liddy, Executive Director of National Industrial Transportation League (NITL).
A full version of this letter is available here.